We have 135 specific ways to make peer analysis more accurate.
Financial ratio analysis is exception analysis. But there's a problem with traditional approaches to peer comparisons – inaccuracy. For comparison purposes banks are typically grouped together based on criteria such as profitability, asset size or geography (i.e., "Midwestern Banks, Under $100 Million"). However, banks that are alike in one respect may have a very different operating strategy which is what ultimately determines a bank's unique route toward high performance. Using this type of traditional financial ratio analysis approach have often produced exceptions that mislead financial institution executives as to what areas are deficient.
Our Solution: 135 Strategic Classifications for Comparable Analysis
This is why Bank Intelligence has developed a Strategic Classification method that creates peer groups of banks with similar operating strategies. This provides valid performance comparisons among banks having identical on- and off-balance sheet compositions and operating strategies. Our groundbreaking approach produces highly accurate ratio and exception analysis. If the comparative results infer a performance deficiency on the part of your bank, you can rely on this information to be valid and accurate. And you can use it to strengthen your competitive edge.
Some of the factors that drive our Strategic Peer Group Classifications and financial ratio analysis include:
- Asset Size
- Date Established
- Metro vs. Rural Markets
- Balance Sheet Composition
- Funding Strategy
- Lending Strategy
- Off Balance Sheet Income
- Tax Equivalence Basis
- And More
Local and Custom Peer Groups Can Add Valuable Perspective
Local peers should be reviewed in addition to your strategic peers to isolate local factors, such as pricing pressures, which may mitigate your bank's opportunity for profitability or earnings improvements. And custom peer groups can offer unique perspective based on strategies your bank is considering. That's why the BankAnalyst® tools provide "Go Local" peer comparisons and enable you to define an unlimited number of custom peer groups.
Learn more about how our Strategic Peer Group Classifications will produce more accurate conclusions to support your strategic planning.